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Income Tax Appellate Tribunal, CUTTACK
Before: SHRI N.S SAINI
This is an appeal filed by the assessee against the order of CIT(A)-3,
Bhubaneswar, dated 9.8.2015 for the assessment year 2010-2011.
The sole issue involved in this appeal is that the ld CIT(A) erred in
confirming the addition of Rs.9,16,535/- made by the Assessing Officer.
I have heard the rival submissions and perused the orders of lower
authorities and materials available on record. The brief facts of the case
are that the Assessing Officer found that the assessee has shown total
2 ITA No. 470 /CT K/ 2015 Asse ssment Year : 20 10- 201 1 receipts of Rs.15,76,980/- in the income and expenditure account. The
assessee has debited expenses under different heads for Rs.14,76,267 and
has shown excess income over expenditure of Rs.1,00,713/-. The
Assessing Officer, due to non-compliance of the assessee with the notices,
allowed deduction only for administrative expenses and disallowed balance
expenditure of Rs.14,59,460/- and assessed the assessee to tax on the said
amount as an AOP.
On appeal, it was submitted that the grant-in-aid as per the income
& expenditure account is Rs.12,26,515/- and as per receipts & payment
account is Rs.20,46,200/-. The difference amount of Rs.9,16,535/- was
unspent grant for utilization in subsequent year and this being a temporary
restricted fund, was not income of the assessee. The CIT(A) observed that
the assessee did not file Form No.10 as required under Rule 17 read with
Section 11(2) alongwith return of income. The appellant has not filed it
even in the course of remand proceedings. Filing of Form No.10 before the
Assessing Officer is mandatory and without particulars of income to be
excluded and set apart for accumulation, the Assessing Officer cannot
entertain the claim of the assessee u/s.11 of the Act. The CIT(A) further
observed that the unspent grants relates to grant received from the
projects CARE, WFP, ACA, AHVY. Restricted grants received is not a
voluntary contribution if grant comes as legal obligation backed by a legally
enforceable contract. In the assessee’s case, the assessee failed to produce
the legal obligations thereon backed by legally enforceable contract in any
3 ITA No. 470 /CT K/ 2015 Asse ssment Year : 20 10- 201 1 proceedings under the Act and in absence of legal obligations attached with
such specific grants/contribution, the CIT(A) held that the restricted grant
amounting to Rs.9,16,535/- is voluntary contribution subject to provisions
of utilization and application as per provisions of law and confirmed the
addition of Rs.9,16,535/-.
Before me, ld Authorised Representative of the assessee argued and
submitted that the addition of Rs.9,16,535/- was confirmed by the CIT(A)
on the ground that the restricted conditions on the grant of Rs.9,16,535/-
was not proved by filing evidence before him. He filed an affidavit
contending that that two letters of Ministry of Textiles, Government of
India both dated 21.8.2009 for Rs.5,43,000/- and Rs.4,50,000/- totaling to
Rs.9,93,000/- were not available to be produced at the time of assessment
proceedings and also proceedings before the CIT(A). Hence, he prayed
that matter may be restored to the file of the Assessing Officer for fresh
adjudication after considering these evidences.
Ld Departmental Representative had no objection for the same.
In view of the above facts and circumstances of the case, I am of the
considered view that the addition was made by the Assessing Officer and
confirmed by the CIT(A) as the assessee failed to produce the grant letters
received from the Ministry of Textiles, Government of India before them for
the restricted conditions. Ld Authorised Representative of the assessee has
now filed before me copies of the said grant letters both dated 21.8.2009.
In my considered view, no harm will be caused if one more opportunity is
4 ITA No. 470 /CT K/ 2015 Asse ssment Year : 20 10- 201 1 allowed to the assessee to produce both the grant letters issued by Ministry
of Textiles, Government of India for fresh adjudication by the Assessing
Officer. I, therefore, set aside the orders of lower authorities and restore
the matter back to the file of the Assessing Officer for fresh adjudication
after considering the grant letters furnished by the assessee as per law.
In the result, the appeal filed by the assessee is allowed for statistical
purposes.
Order pronounced in the open court on 22/03/2017 in the presence of parties.
Sd/- (N.S Saini) ACCOUNTANT MEMBER
Cuttack; Dated 22/03/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : People’s Awareness and Hilly Area Development (PAHAD, Sudrukumpa, Phulbani, Kandhamal. 2. The Respondent. DCIT, Berhampur Circle, Berhampur/Income Tax officer (Exemption) Berhampur-. 3. The CIT(A) 3, Bhubaneswar 4. Pr.CIT-3, Bhubaneswar. BY ORDER, 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// SR.PRIVATE SECRETARY ITAT, Cuttack